-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OC+cE1QWHngYwLn7PG8bvLW4E+q3mROkgHYgmgh/UFB8Pt7GcnjJmqaFl1du3C4E 8b8Dy2eqanei9bfEaxGR5w== 0000897101-96-000641.txt : 19960814 0000897101-96-000641.hdr.sgml : 19960814 ACCESSION NUMBER: 0000897101-96-000641 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAKOTAH INC CENTRAL INDEX KEY: 0000859944 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED TEXTILE PRODUCTS [2390] IRS NUMBER: 460339860 STATE OF INCORPORATION: SD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-23604 FILM NUMBER: 96610935 BUSINESS ADDRESS: STREET 1: ONE N PARK LN CITY: WEBSTER STATE: SD ZIP: 57274-0120 BUSINESS PHONE: 6053454646 MAIL ADDRESS: STREET 1: ONE NORTH PARK LANE CITY: WEBSTER STATE: SD ZIP: 57274-0120 10QSB 1 UNITED STATES SECURITIES & EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB Quarterly report pursuant to Section 13 of 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1996 Commission File Number 0-23604 DAKOTAH, INCORPORATED (Exact Name of Registrant as Specified in Its Charter) South Dakota 46-0339860 (State or Other Jurisdiction of (I.R.S. Employer Incorporation of Organization) Identification Number) One North Park Lane Webster, SD 57274 (Address of Principal Executive Offices, Zip Code) Registrant's Telephone Number, Including Zip Code: (605) 345-4646 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the proceeding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes: __X__ No: ____ Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Common stock, $.01 par value, 3,499,755 shares outstanding as of July 12, 1996. DAKOTAH, INCORPORATED INDEX PART I. FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets (Unaudited): June 30, 1996 and December 31,1995 Statements of Earnings (Unaudited): Three month and six month periods ended June 30, 1996, and June 30, 1995 Statements of Cash Flows (Unaudited): Six month periods ended June 30, 1996, and June 30, 1995 Notes to Financial Statements: June 30, 1996 Item 2. Management's Discussion and Analysis or Plan of Operation PART II. OTHER INFORMATION Items 1 through 3 and 5 have been omitted since items are inapplicable or answer is negative Item 4. Submission of Matters to a Vote of Security Holders Item 6. Exhibits and Reports on Form 8-K (a.) Exhibit Number: Description: 27.1 Financial Data Schedule (b.) Reports on Form 8-K None
ITEM 1: Financial Statements DAKOTAH, INCORPORATED BALANCE SHEETS (Unaudited) June 30, December 31, ASSETS 1996 1995 ----------- ----------- CURRENT ASSETS Cash and cash equivalents $ 31,913 $ 477,330 Accounts receivable less allowance for doubtful accounts of $361,000 in 1996 and $324,000 in 1995 4,397,879 6,365,606 Inventories 11,352,707 7,364,035 Prepaid expenses 738,430 477,507 Deferred income taxes 467,000 467,000 ----------- ----------- Total current assets 16,987,929 15,151,478 PROPERTY, PLANT AND EQUIPMENT - AT COST Land 36,000 36,000 Buildings and improvements 1,526,165 1,405,536 Leasehold improvements 122,362 123,731 Machinery and equipment 2,614,847 2,047,676 Office equipment, furniture and fixtures and other 693,987 481,816 ----------- ----------- 4,993,361 4,094,759 Less accumulated depreciation & amortization 2,226,533 1,885,274 ----------- ----------- 2,766,828 2,209,485 OTHER ASSETS Deferred income taxes 349,000 349,000 Other 425,869 425,869 ----------- ----------- 774,869 774,869 ----------- ----------- $20,529,626 $18,135,832 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable to bank $ 5,877,909 $ 3,666,796 Current maturities of long-term obligations, including $435,603 in 1996 and $209,893 in 1995 to related parties 532,365 577,152 Accounts payable 2,346,014 2,253,281 Accrued liabilities Compensation and related benefits 630,037 654,036 Other 449,512 413,025 ----------- ----------- Total current liabilities 9,835,837 7,564,290 LONG-TERM OBLIGATIONS, less current maturities, including $356,787 in 1996 and $1,155,600 in 1995 to related parties 1,124,810 1,051,487 STOCKHOLDERS' EQUITY Common stock, par value $.01; 10,000,000 shares authorized; issued & outstanding shares 3,499,755 34,998 34,998 Additional contributed capital 6,804,156 6,804,156 Retained earnings 2,729,825 2,680,901 ----------- ----------- 9,568,979 9,520,055 ----------- ----------- $20,529,626 $18,135,832 =========== =========== The accompanying notes are an integral part of these statements.
DAKOTAH, INCORPORATED STATEMENTS OF EARNINGS (Unaudited) For the three months ended June 30, For the six months ended June 30, 1996 1995 1996 1995 ------------ ------------ ------------ ------------ Net sales $ 6,559,731 $ 5,586,749 $ 13,964,555 $ 11,832,075 Cost of goods sold 4,529,806 3,978,964 9,970,397 8,582,757 ------------ ------------ ------------ ------------ Gross profit 2,029,925 1,607,785 3,994,158 3,249,318 Operating expenses Selling 984,484 926,886 2,078,682 1,853,556 General and administrative 842,126 595,337 1,617,052 1,227,088 ------------ ------------ ------------ ------------ 1,826,610 1,522,223 3,695,734 3,080,644 ------------ ------------ ------------ ------------ Operating profit 203,315 85,562 298,424 168,674 Other income (expense) Interest expense (124,969) (36,237) (203,847) (76,489) Gain on sale of equipment 6,867 2,722 6,867 58,932 Other (11,866) 6,833 (25,000) 17,150 ------------ ------------ ------------ ------------ (129,968) (26,682) (221,980) (407) Earnings before income taxes 73,347 58,880 76,444 168,267 Income tax expense 26,405 21,100 27,520 60,500 ------------ ------------ ------------ ------------ NET EARNINGS $ 46,942 $ 37,780 $ 48,924 $ 107,767 ============ ============ ============ ============ Net earnings per share $ 0.01 $ 0.01 $ 0.01 $ 0.03 ============ ============ ============ ============ Weighted average common shares outstanding 3,499,755 3,499,755 3,499,755 3,499,755 ============ ============ ============ ============ The accompanying notes are an integral part of these statements.
DAKOTAH, INCORPORATED STATEMENTS OF CASH FLOWS (Unaudited) For the six months ended June 30, 1996 1995 ----------- ----------- Cash flows from operating activities: Net earnings $ 48,924 $ 107,767 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities Depreciation and amortization 341,259 189,173 Changes in assets and liabilities: Accounts receivable 1,967,727 1,319,100 Inventories (3,988,672) (1,447,092) Prepaid expenses (260,923) (256,890) Accounts payable 92,733 589,162 Accrued liabilities 12,488 (76,699) Income taxes payable -- (178,309) ----------- ---------- Total adjustments (1,835,388) 138,445 ----------- ---------- Net cash provided by operating activities (1,786,464) 246,212 Cash flows from investing activities: Capital expenditures (898,602) (259,184) ----------- ---------- Net cash used in investing activities (898,602) (259,184) Cash flows from financing activities: Net payments under line-of-credit 2,211,113 66,356 Proceeds from issuance of long-term obligations 300,000 25,268 Principal payments on long-term obligations (271,464) (16,762) ----------- --------- Net cash used in financing activities 2,239,649 74,862 ----------- --------- Net increase (decrease) in cash and cash equivalents (445,417) 61,890 Cash and cash equivalents at beginning of period 477,330 575,684 ----------- --------- Cash and cash equivalents at end of period $ 31,913 $ 637,574 =========== ========== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest 155,575 30,123 Income taxes -- 323,174 The accompanying notes are an integral part of these statements.
DAKOTAH, INCORPORATED NOTES TO FINANCIAL STATEMENTS NOTE A: BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been prepared in accordance with the instructions of Form 10-QSB pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, the unaudited condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position as of June 30, 1996, the results of operations for the three and six month periods ended June 30, 1996 and 1995, and the cash flows for the six month periods ended June 30, 1996 and 1995. Operating results for interim periods are not necessarily indicative of results which may be expected for the year as a whole. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION RESULTS OF OPERATIONS: The following table sets forth the percentage relationship to net sales of certain items in the Company's statements of earnings for the three and six month periods ended June 30, 1996 and 1995.
Percentage of Net Sales Percentage of Net Sales for the three month for the six month period ended June 30, period ended June 30, 1996 1995 1996 1995 ------ ------ ------ ------ Net Sales 100.0% 100.0% 100.0% 100.0% Gross Profit 30.9 28.8 28.6 27.5 Selling Expenses 15.0 16.6 14.9 15.7 General & Administrative 12.8 10.7 11.6 10.4 Operating Profit 3.1 1.5 2.1 1.4 Interest Expense 1.9 0.6 1.5 0.6 Earnings Before Income Taxes 1.1 1.1 .5 1.4 Net Earnings 0.7 0.7 .4 0.9
NET SALES increased 18% to $13,965,000 for the six months ended June 30, 1996 from $11,832,000 in the same period of 1995. Net sales increased from $5,587,000 in the second quarter of 1995 to $6,560,000 in the second quarter of 1996. The increase in net sales in the first six months of 1996, as compared to the first six months of 1995, is due primarily to the Company's new Polarfleece(R) line of products and expanded sales of the Company's table linen, bedding, and accessories products. GROSS PROFIT PERCENTAGES increased from 27.5% in the first six months of 1995 to 28.6% for the same period of 1996. During the second quarter of 1996, compared to the same period of 1995, gross profit percentages increased to 30.9% from 28.8%. Gross profit percentages were positively affected by a decrease in the cost of raw materials as a percentage of sales and negatively affected by increased labor expense, depreciation expense, and other manufacturing overhead expenses related to new and expanded manufacturing capacity. SELLING EXPENSES, as a percentage of net sales, decreased from 15.7% in the first six months for 1995 to 14.9% in 1996. The decline in selling expense as a percentage of net sales from the first six months 1995 to the comparable period in 1996 is primarily due to the increase in net sales. The amount of selling expenses increased primarily as the result of higher sales representative commissions related to increased net sales, the Company's efforts to develop new channels of distribution and customers, including but not limited to the Company's expansion of in-house sales staff and the hiring of a new Vice President of Corporate Sales. Additionally, the Company's participation in the Heimtextil trade show in Frankfurt, Germany and expanded showrooms in Chicago and Atlanta has increased selling expenses in 1996 as compared to 1995. GENERAL AND ADMINISTRATIVE EXPENSES increased from $1,226,000 in the first six months of 1995 to $1,617,000 during the same period in 1996. The increase is primarily due to the Company's expansion of design and product development capabilities, middle management and clerical support, and other general support for the addition of the Polarfleece(R) line of products and the related manufacturing facilities in Platte and Redfield, SD. GAIN ON SALE OF EQUIPMENT was $56,000 in the first six months of 1995, compared to no gain or loss during the first quarter of 1996. The 1995 gain resulted from the sale of excess equipment. INTEREST EXPENSE increased from $76,000 in the first six months of 1995 to $204,000 in the first six months of 1996. This increase was the result of higher average borrowings to finance capital expenditures, higher accounts receivable, and higher inventories. Most of the buildup of inventory is related to shipments to be made in the third and fourth quarters. LIQUIDITY AND CAPITAL RESOURCES Working capital was $7.6 million as of December 31, 1995 compared to $7.1 million as of June 30, 1996. At December 31, 1995, the Company had cash and cash equivalents of $477,000 and $32,000 at June 30, 1996. The decrease in cash was applied to the Company's revolving line-of-credit. The Company has used and expects to continue using bank lines of credit to meet its short-term working capital requirements. On July 11, 1996, the Company amended its credit facility. The amended credit facility, which expires August 1998, consists of a revolving note and a term note. The total amount available under the revolving note, which is due on demand, is limited to the lesser of $9 million or a defined borrowing base of eligible accounts receivable and eligible inventories. The Company's amendment to the line of credit allows for a permanent advance against inventory and finances the capital expenditures related to the opening of the new Redfield Polarfleece(R) manufacturing facility, the procurement of additional Polarfleece(R) fabric at advantageous prices from the Company's supplier of Polarfleece(R) fabrics and the production of Polarfleece(R) products for shipment in the third and fourth quarters of 1996. The term note is due on demand and requires monthly principal payments of $20,833. Both notes provide for monthly interest payments at 1.5% above the bank's prime rate and are collateralized by accounts receivable, inventory, equipment, and general intangibles. The outstanding balances on the revolving note and term note were $5,045,000 and $833,000 at June 30, 1996. For the six month period ended June 30, 1996, the Company's capital expenditures were $899,000. These capital expenditures include $687,000 to expand manufacturing capacity, upgrade existing buildings, and additional production equipment and $189,000 to upgrade the Company's computer system but do not include the capital expenditure related to the acquisition of the Company's 42,000 square foot Polarfleece(R) manufacturing facility in Redfield, South Dakota. The Company expects to enter into a lease purchase agreement with the Redfield Development Corporation during the third or fourth quarter of 1996. The total capital expenditure related to the Redfield plant will be approximately $700,000. The Company expects to spend an additional $1,100,000 for the remainder of 1996 to expand capacity and to expand and up-grade existing buildings and production equipment. These future capital expenditures include approximately $550,000 for a 32,000 square foot expansion onto the Company's main manufacturing facility in Webster, South Dakota. In addition to the above capital expenditures the Company expects to spend an additional $150,000 to continue the upgrade and expansion of the Company's computer system. Upon termination of the officers' stock appreciation program, the Company became indebted to the Company's President and a former Executive Vice President in the aggregate amount of $1,318,000. As of June 30, 1996, the total outstanding indebtedness was $669,000. This indebtedness bears interest at 6% per annum and is payable in varying installments through January 1998. The Company believes that cash flows generated from operations and funds available as a result of its borrowing capacity will be adequate to meet its short-term working capital, projected capital expenditures and other financing needs. ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Annual Meeting of Stockholders on June 12, 1996, the Company submitted to a vote of security-holders the following matters which received the indicated votes.
1. Election of Directors: For Withhold Authority Broker Non-Votes James D. Becker 3,343,136 11,821 -0- Linda J. Laskowski 3,341,986 12,971 -0- Lee A. Schoenbeck 3,338,476 16,481 -0- Leo T. Reynolds 3,341,986 12,971 -0-
2. Approval of the adoption of the 1995 Stock Option Plan: For Against Abstain Broker Non-Votes 2,257,185 308,298 14,984 774,490 3. Approval of the adoption of the 1996 Stock Option Plan for Directors: For Against Abstain Broker Non-Votes 2,422,709 140,338 25,720 766,190 4. Ratify the appointment of Grant Thornton LLP as independent auditors for the current fiscal year: For Against Abstain Broker Non-Votes 3,334,778 13,361 6,818 -0- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registered has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DAKOTAH, INCORPORATED August 12, 1996 By: /s/ Troy Jones, Jr. ------------------------------------- Troy Jones, Jr. Chief Executive Officer (Principal Financial and Accounting Officer) August 12, 1996 By: /s/ George Whyte ------------------------------------ George Whyte President and Chairman EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1996 JUN-30-1996 31,913 0 0 0 11,352,707 16,987,929 4,993,361 2,226,533 20,529,626 9,835,837 1,124,810 0 0 34,998 9,533,981 20,529,626 13,964,555 13,964,555 9,970,397 9,970,397 0 0 203,847 76,444 27,520 48,924 0 0 0 48,924 .01 0
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